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Free AccessMNI: BOE MPC Leaves Policy Unchanged; 2 Members Back More QE
-Seven-to-Two Vote For Unchanged QE; Haskel, Saunders Dissent
By David Robinson
LONDON (MNI) - The Bank of England Monetary Policy Committee left policy
unchanged Thursday, confounding some expectations of an increase in the size of
its asset purchase programme.
The MPC split seven-to-two over the decision to leave the asset purchase
target at GBP645 billion, with two members voting to raise it by GBP100 billion,
and all nine backing leaving Bank Rate on hold at 0.1%.
The following are key points from the minutes and policy decision:
-Jonathan Haskel and Michael Saunders both voted to increase total
quantitative easing to GBP745 billion.
Their argument in favour of the GBP100 billion increase relied on timing.
They took the view that the Bank should make clear it would continue with its
current rapid pace of gilt buying for the next three months. "They judged that
it would be preferable to announce now that the current pace of asset purchases
would be maintained at least until the time of the August Monetary Policy
Report," the minutes stated.
-The majority view was that further stimulus might well be needed but they
argued that they could wait and see how events unfolded in coming weeks.
"The prospective weakness in employment and inflation, and downside risks
around aspects of the medium-term outlook, might necessitate further monetary
policy action to support the economy in the future," the other members agreed.
The government is set to provide a framework for easing the lockdown in
response to the coronavirus and details are lacking as yet on the likely
tapering of income support provided by the Treasury.
"The Committee would learn more about the economic outlook as a plan for
starting to relax Covid-related restrictions on activity was announced," the
minutes said.
-All MPC members agreed that the MPC would act rapidly if the currently
orderly gilt market were to become dysfunctional again, as it had been in
mid-March before the Bank stepped in with fresh QE.
--MNI London Bureau; tel: +44 203-586-2223; email: david.robinson@marketnews.com
[TOPICS: M$B$$$,M$E$$$,M$$BE$]
To read the full story
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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.